Revocable Trust Questions

[nwsteve]

Not a lawyer, but LT is different “animal” with different legal powers but estate lawyer shud review and guide you on how your state views the two docs
As mentioned, POA becomes null at death

 

[PatrickA5]

I would think POD/TOD on your accounts would be "private". Not sure how your son would find out about them. Since obtaining the funds could take a while, you might want to consider a "smallish" joint account with your daughter to pay expenses until she gets the inherited money.

Considering the Vanguard Joint account, one of the reasons we moved from Vanguard to Fidelity was VGs stupid policy of not allowing beneficiaries on joint accounts. The transfer was simple.

I'm not saying don't do a trust. There are plenty of reasons for a trust.

 

[GrayHare]

I would think POD/TOD on your accounts would be "private".

It depends. Some financial institutions include the name of the beneficiary on documents, mail, etc.

 

[pb4uski]

I think that you are being penny-wise and pound-foolish avoiding the trust route. It's really preferable.

 

[Earl E Retyre]

I think that you are being penny-wise and pound-foolish avoiding the trust route. It's really preferable.

Maybe I am missing something… why is it preferable?

I thought I was getting privacy and quick access to inheritance via TODs and protection from incapacity through POAs. What am I losing by not setting up a living trust?

 

[OldShooter]

Maybe I am missing something… why is it preferable?

I thought I was getting privacy and quick access to inheritance via TODs and protection from incapacity through POAs. What am I losing by not setting up a living trust?

You are losing access to people who actually understand the problem you are trying to solve. Sometimes the cheapskate urge is not the best action to take.

 

[ut2sua]

DW and I each have our own separate trust, but they are basically identically set up with everything going to each other
Our Trust has some language to allow the IRAs to retain their ERISA protection after required distributions are made.

For having separate trusts, how do you place your house(s) in each trust? Each trust get 1/2 of each properties, or do you decide which properties go to a particular trust?
Also, by having the IRAs in the trust(s), would it become a taxable event the moment the trustee pass away?
For us, we just put our kids' names in the IRA beneficiary. IRA accounts are not in our trust.

 

[Earl E Retyre]

You are losing access to people who actually understand the problem you are trying to solve. Sometimes the cheapskate urge is not the best action to take.

Well, I have to meet with my estate attorney anyway to change our Wills to make daughter 100%. So I will ask her if she recommends I add a living trust. I have no issue paying for one. I am just not sure yet what I am missing.

 

[pb4uski]

My experience with DM was that after Schwab knew that she died I was totally frozen out of her retirement accounts even though I had trading authority while she was alive. I could see that I would lose the ability to trade but I didn't even have read access and those accounts evaporated into thin air.

For the accounts with beneficiary designations they told me it would take 5 weeks for her assets to be distributed to the beneficiaries even after all the beneficiaries had established accounts to receive the assets and they acknowledged that they received the death certificate. I raised a stink and threatened to file a complaint with ERISA if it wasn't done in a few days. It ultimately was done in a few days.

OTOH, for the trust I sent them instructions how to distribute the taxable account assets for two different trusts and the transfers were done the next day without any hassle.

 

[pb4uski]

Well, I have to meet with my estate attorney anyway to change our Wills to make daughter 100%. So I will ask her if she recommends I add a living trust. I have no issue paying for one. I am just not sure yet what I am missing.

Do you have much outside of retirement accounts?

 

[Earl E Retyre]

My experience with DM was that after Schwab knew that she died I was totally frozen out of her retirement accounts even though I had trading authority while she was alive. I could see that I would lose the ability to trade but I didn't even have read access and those accounts evaporated into thin air.

For the accounts with beneficiary designations they told me it would take 5 weeks for her assets to be distributed to the beneficiaries even after all the beneficiaries had established accounts to receive the assets and they acknowledged that they received the death certificate. I raised a stink and threatened to file a complaint with ERISA if it wasn't done in a few days. It ultimately was done in a few days.

OTOH, for the trust I sent them instructions how to distribute the taxable account assets for two different trusts and the transfers were done the next day without any hassle.

ok, I did not realize TODs could be that much of a hassle.

 

[Earl E Retyre]

Do you have much outside of retirement accounts?

Yes, the majority of assets are outside of retirement accounts. Some Vanguard, some Fidelity, several banks and a rental property. On the one hand, if it took daughter a couple months to get access to all TODs it would not be a big deal. She has her own savings and wouldn’t need it immediately. OTOH, if a trust makes it much easier then perhaps it’s worth the cost and hassle of creating and moving all assets beneath a trust.

 

[Morgan22]

There can be reasons for a trust, you can talk to a lawyer and they can give you scenarios as to why you should go that route.
But if you want to go non trust route and have everything to go to your daughter, and don't want items to pass through probate, then list your daughter as TOD on bank accounts, or on retirement accounts primary beneficiary per stirpes (if she passes first and has children, assets go to them.) If she does not children, list a secondary beneficiary(ies) like a charity, or nieces/nephews. For items that you can not list beneficiaries or TOD, like a house in some states, put that in a revocable trust.
BTW, beneficiary and TOD designations override any will.

 

[CaliKid]

Hmmm …. I do have medical and durable power of attorney documents. I am not sure but that may cover the disability part I also have a Will that I assume if daughter passes before us then the TOD would not execute and the money would transfer to my estate which would then go to my son??

Please hire a good attorney. Your stretching to try to make your plan work but it's a BAD PLAN. I am being as nice as I can here. In this case, for example, most banks don't honor POAs so a financial POA is practically worthless but still good to have for a few other reasons I won't bore you with here. Medical POA of course has nothing to do with bank accounts and is very important to have. If a TOD dies before you then yes, likely, your will would speak but only after probate court. Please hire an attorney.

 

[Earl E Retyre]

Please hire a good attorney. Your stretching to try to make your plan work but it's a BAD PLAN. I am being as nice as I can here. In this case, for example, most banks don't honor POAs so a financial POA is practically worthless but still good to have for a few other reasons I won't bore you with here. Medical POA of course has nothing to do with bank accounts and is very important to have. If a TOD dies before you then yes, likely, your will would speak but only after probate court. Please hire an attorney.

I do have a good attorney that specializes in estates. I am not bypassing her. I was planning on setting up an appointment with her over the next couple weeks to rewrite the current wills that she had written for us. I was going to ask her to rewrite them to be much simpler than they are today and say everything goes to Daughter (except a tiny amount for non-contest clause). In our current Wills, Lawyer had written them such that testamentary trusts are created upon death for son and daughter. But since I am cutting son out and since daughter is now old/wise enough to be her own executor and trustee, I was going to take ask to remove the testamentary trusts.

Initially, I was thinking of asking lawyer to create a Living Family Trust and have daughter be the beneficiary and I would move most of my assets under it. That way it would be private to son how much assets we had. Privacy was the key driver behind the decision to create the Family Trust in my mind. Then, I had the idea that this is not necessary and I could simply TOD daughter the majority of the assets and still achieve my goal of privacy. I will ask the my attorney if she sees an advantage to going the Trust route versus TOD route. I would have assumed TOD would be very easy - especially since in my case, it would be 100% to daughter (single beneficiary). I read PB4's note above that they can take longer for the beneficiary to receive assets so that is one argument for the Living Trust route.

I honestly have no issue paying the extra few grand to set up the family trust and to move assets underneath it. I just want to make sure that I understand them and know what I am getting from doing so. Maybe I am leaning TOD since I am more familiar/comfortable with TODs than I am a family trust. The whole family trust idea is new to me. Whereas I have been setting up TODs on my retirement accounts for many years. And yesterday, I quickly added beneficiaries for the majority of my non-retirement accounts as TODs. It is quick and easy to do for most banks online. So I am very comfortable with the idea of TOD.

Again I will discuss with my attorney. Being a cheapskate is not my goal. I was hoping one of you would have a very compelling argument for me to go the Living Trust route. I will ask my attorney about it no matter what.

 

[pb4uski]

Yes, the majority of assets are outside of retirement accounts. Some Vanguard, some Fidelity, several banks and a rental property. On the one hand, if it took daughter a couple months to get access to all TODs it would not be a big deal. She has her own savings and wouldn’t need it immediately. OTOH, if a trust makes it much easier then perhaps it’s worth the cost and hassle of creating and moving all assets beneath a trust.

As I'm sure you know, the trust option isn't available for 401ks or IRAs or HSAs so if large percentage of your assets is in retiremnt accounts and little is in taxable accounts then perhaps the trust option isn't as attractive.

That's the situation I'm mulling 48% of our retirement portfolio is in my traditional IRA and another 30% are in Roths and HSAs, so only 22% are in taxable accounts that could be in a trust so while I'm a fan of trusts and had very good experience with them as the trustee of my parents' trusts, I'm not sure that they do much for us so I haven't decided yet.

 

[PatrickA5]

Our recent experience with FIL's estate was T. Rowe Price took 2 days (after filing), bank accounts were next day, Fidelity was about 10 days and Vanguard was an absolute nightmare. The only thing that went through probate were some paper Ibonds that I tried to get him to change the title on for years and he didn't think it was necessary.

OP, let us know what the lawyer thinks. We went through this process last year visiting a number of estate lawyers. In our situation, none of them could come up with a compelling reason for a trust, so we had our prior estate lawyer redo all of our Wills, POA's, Medical, etc.

Our situation is different than yours, though and it might be that a trust is needed in your case.

 

[PatrickA5]

As I'm sure you know, the trust option isn't available for 401ks or IRAs or HSAs so if large percentage of your assets is in retiremnt accounts and little is in taxable accounts then perhaps the trust option isn't as attractive.

That's the situation I'm mulling 48% of our retirement portfolio is in my traditional IRA and another 30% are in Roths and HSAs, so only 22% are in taxable accounts that could be in a trust so while I'm a fan of trusts and had very good experience with them as the trustee of my parents' trusts, I'm not sure that they do much for us so I haven't decided yet.

pb4uski:

We're in the same boat. A good 80% of our investments are in IRA's. Each of the lawyers said that they'd just leave those as TOD. We have POD/TOD on all of our accounts and even have TOD on the house. At this point, nothing would go through probate.

My dad had the same set up (all TOD/POD/Joint) and had his house TOD. No probate was filed and the entire estate was handled (including selling the house) within 6 weeks of his passing.

FIL almost had everything set up to avoid probate, but the Ibonds (mentioned above) required filing probate and a very long wait for Treasury Direct to transfer ownership and redeem the bonds (more than 6 months). Those Ibonds cost $4,000 in attorney fees (to file probate) and a long wait. All of the TOD/PODs were very timely with the exception of Vanguard due to their inept customer service.

 

[Sunset]

We found Vanguard took at most 1 week to move $ based on TOD/POD, to existing Vanguard account for 1 beneficiary.

What a longer amount of time was getting other relatives to set up a Vanguard account, so the stock could be transferred into it.

 

[PatrickA5]

We found Vanguard took at most 1 week to move $ based on TOD/POD, to existing Vanguard account for 1 beneficiary.

What a longer amount of time was getting other relatives to set up a Vanguard account, so the stock could be transferred into it.

I'm sure we just got unlucky. I was convinced their fax machine was connected to a trash can. We did finally talk to someone that actually knew what they were doing and handled the process in a few days. It was a very simple TOD - one account with one mutual fund split between two beneficiaries. Took a month.

 

[OldShooter]

... I was going to take ask to remove the testamentary trusts. ...

... Initially, I was thinking of asking lawyer to create a Living Family Trust and have daughter be the beneficiary and I would move most of my assets under it. ...

Good job on the attorney plan. I have a suggestion though:

It is very good that you are educating yourself on these subjects, but in the end your attorney should be the real expert. I strongly suggest that you describe to her the problem(s) you are trying to solve rather than asking her to implement the solutions you have come up with on your own. It's like hiring an expert chef. There's no point in making the hire if you are going to tell the chef what to cook.

The value of the attorney is not in the paperwork created but in the experience, discussions, and tradeoffs that the paperwork implements.

 

[PatrickA5]

Good job on the attorney plan. I have a suggestion though:

It is very good that you are educating yourself on these subjects, but in the end your attorney should be the real expert. I strongly suggest that you describe to her the problem(s) you are trying to solve rather than asking her to implement the solutions you have come up with on your own. It's like hiring an expert chef. There's no point in making the hire if you are going to tell the chef what to cook.

The value of the attorney is not in the paperwork created but in the experience, discussions, and tradeoffs that the paperwork implements.

+1, excellent advice.

A couple of the attorneys I went to seemed to push Trusts. When I asked specific questions on how the trust would solve my specific issues, they couldn't really give a good answer. You have to know exactly what you're trying to solve with a Trust (or Will) going in.

OP, make sure you're not going to a Trust mill type of firm. They make most of their money selling trusts. They are usually the ones holding free seminars at hotels. I went to a couple. They almost refused to discuss a Will. They had a "comeback" for most objections, but were pretty much clueless on some things (taxes, etc). I asked one lawyer how many probates she had done and she said "none, a trust doesn't need to be probated". Run!

 

[Gallaher]

I agree with leaving a small something to your son. That eliminates him claiming he was 'forgotten'. When my mother passed her attorney told us to provide a copy to my sister (who was essentially written out of the trust and will) as the will had a poison pill - if she contested she got nothing.

Absolutely consider what you want to happen if your daughter predeceases you.

I respect the OP’s decision to write son out. OP is explicit they dont need advice on this point. Life is complicated.
I have a similar situation. Estate attorney suggested we leave a nominal amount to individual as “evidence” we did not “forget” them.
We will leave $20K of a currently $4 mil estate to the individual.

 

[pb4uski]

We found Vanguard took at most 1 week to move $ based on TOD/POD, to existing Vanguard account for 1 beneficiary.

What a longer amount of time was getting other relatives to set up a Vanguard account, so the stock could be transferred into it.

I'll have to give my siblings credit, they each established taxable, traditional IRA and Roth IRA accounts with Schwab promptly which was handy because once Schwab acknowledged that they had DM's death certificate I knew that they had everything that they needed so I could pressure them to make the transfers. When they initially said 5 weeks I went beserk on them... ridiculous... and they did it in a few days so I guess that the squeaky wheel does get the grease.

 

[RetMD21]

What a longer amount of time was getting other relatives to set up a Vanguard account, so the stock could be transferred into it.

Did they make the other beneficiaries wait until everybody had an account? I am hoping that this won't happen with MIL's 6 beneficiary "plan."